Sports gaming is a big business, with the potential for over $100 billion in annual revenue worldwide. As this massive entertainment industry continues to grow, a battle is underway between top companies over what kinds of gaming products should be allowed. The outcome stands to shape the future of sports gaming for fans, and for innovation in the gaming marketplace.
At the center of the debate are two juggernauts of sports gambling, FanDuel and DraftKings. These former fantasy sports providers transformed their business models after a 2018 Supreme Court ruling opened the floodgates for legal sports betting. Now positioned as sports "gambling operations," the duo enjoys favored status under stringent regulations meant to protect problem gamblers.
Yet FanDuel and DraftKings now want to force the same burdensome rules on a new generation of fantasy-style games known as daily fantasy sports (DFS). Offered by competitors like PrizePicks, Underdog Fantasy and others, these skill-based contests resemble the original fantasy leagues that the two giants left behind. Players pick teams based on sports knowledge, not sheer luck, making DFS fundamentally different from traditional sports gambling.
So why would FanDuel and DraftKings, self-styled disruptors who helped modernize gaming laws, suddenly crusade against innovation? The motive is transparent: money and power. As a legal duopoly on sports betting, they have every incentive to smother rivals and dominate the market. Their campaign has culminated in official demands to regulate DFS as gambling, followed by targeted investigations in multiple states.
Such behavior, coordinated through the companies' joint Sports Betting Alliance lobbying group, aims to deny consumers access to DFS. It coincides with reported efforts to pressure business partners to stop working with FanDuel and DraftKings' rivals. If proven true, such collusion would violate federal antitrust laws meant to protect fair competition.
At stake is more than just the profits of a few gaming firms. The contests at issue represent a cultural shift in how Americans enjoy sports. The rise of fantasy play and cutting-edge data analytics has transformed passive viewers into engaged fans. Half of all U.S. adults now report engaging in some form of sports gaming, attracted by its knowledge-based skills and social connections.
Daily fantasy sports stand poised to expand participation even further—their model centers on building fan expertise through steady play, not risky bets. Users gain a deeper appreciation of athletes, teams, and sports strategy by picking optimal player lineups over an entire season. The very best players can even win life-changing payouts from their hard-won knowledge.
This passion-driven engagement is why major sports leagues once embraced fantasy providers as partners. But now, those same leagues support FanDuel and DraftKings, restricting their upstart rivals. It echoes a cycle seen before, when moral objections to gambling gave way to pragmatic legalization, only to spawn new calls for prohibition.
At heart, the attempt to suppress competition is about money and power under the guise of consumer protection. Yet America has already witnessed the failures of similar "vice" crackdowns on gambling and alcohol. Outright bans only drive markets underground, enriching criminal elements without preventing abuse. If special attention is needed for certain industries, then honest regulation and harm reduction do more good.
The gaming world badly needs those lessons today. Happily, FanDuel and DraftKings already won their place as legal sportsbook operators, but now seek to game the system against other innovators closing the door to opportunity behind them once they were secure. Rather than limit choices for sports fans, regulators should focus on safeguarding all participants while letting companies compete fairly for their business.
Americans enjoy gaming as entertainment, not a moral failing needing strict control. In a fair marketplace, providers would have incentives to offer better products, better prices, and solutions for problem gaming. Sports are ultimately about competition on a level playing field, with the most talented competitors winning. Our policies should be, too.
Bartlett Cleland is the Executive Director at the Innovation Economy Institute.
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